Ekonomik ve Sosyal Araştırmalar Dergisi, cilt.18, sa.1, ss.17-27, 2022 (Hakemli Dergi)
This study aims to examine the relationship between terrorism and economic growth for a panel of fifteen Middle Eastern countries for the 2003-2019 period. Panel data analysis has the advantage of providing more information, more variability, and less collinearity in the data compared to single-country time series analysis. Besides this advantage, most of the cross-country panel data studies in the terrorism and economic growth literature assume that the terrorist activities are homogeneous across countries. We used the Dumitrescu-Hurlin panel causality test accounting for cross-sectional heterogeneity, which is widely ignored in most panel data studies on terrorism and economic growth nexus. Dumitrescu-Hurlin causality test results reveal in favor of a uni-directional causal relationship between terrorism and economic growth in the Middle East for the overall panel. We also find that this uni-directional relationship is ruled by the strong country-specific influence of Iraq.